219. Can I welcome you for this last session today of our inquiry into education in Birmingham. It is a delight for me to welcome John Towers, the Chairman of the Learning and Skills Council, David Cragg, the Chief Executive, Mark Linton and Stephen Ellison. Can I apologise that the story in the Evening Mail rather got out of hand. When we did our original press release conference on Monday, they said, "What are you doing here?" We explained that this is the beginning of week-long intensive look at education and skills in one city. It is very unusual for a select committee to do this and to spend that amount of time. It takes a lot of commitment to get nine Members of Parliament to do that. They said, "Are there any people you would like to meet?" and we said we would like to see employers because we have had a disappointing response from the people we originally approached. We have got a very good mixture, including John Towers whom I know from my Chairmanship of the Manufacturing Group in Parliament. Welcome all of you. The background is this: this Select Committee only inquires into things which we think can add value. We have been away from secondary education for a long time. We have done a lot of stuff in higher education in the last couple of years. We have done early years and we have done the individual learning accounts inquiry quite recently but many people could criticise us by saying we have been away from mainstream education for some time. As I have said constantly, the Government tanks are on the lawns of the secondary schools. Secondary schools will be our whole year's focus in the coming year, looking at admissions, looking at diversity, all the different kind of schoolsspecialist schools, foundation schools, CTCsand whether that will drive up standards and whether it is essentially good use of taxpayers' money to produce the people this country needs in educational terms. We are also looking at difficult to teach pupils, the under-achievers, and also looking at recruitment and retention of staff, so quite an agenda. Here in Birmingham we are looking at everything. We have dipped into primary schools, we have looked at a faith school, we have looked at a lot of comprehensive schools, we have looked at exclusion, at PRUs, we have been with the three universities. We are an Education and Skills Committee too so questions we are pointing to the four of you will be looking at skills, particularlyand I have warned John and the others before they came inabout the match and mismatch between what this city's and this region's needs in terms of skills against what we are actually producing. Let's get started. Can I invite Birmingham Learning and Skills Council to say a few words to open our session.

(Mr Towers) I guess you know the history of how we moved over the past two years from the TECs organisations and so on to where we are now. We are actually pretty chuffed at the way it has gone in Birmingham. I know it has been the source of quite lot of change/fall-out in many parts of the country, but I would say reallyand unfortunately I have to say this despite the fact he is herebecause of David's planning and foresight in terms of how the changes were going to come about before they were announced, we prepared very hard as far as we could to actually begin to change before the formal changes were announced, as a result of which we are pretty well-known as the part of the country where the changes have occurred most smoothly. This is not an LSC saying that we went through two years of hell with massive staffing and teething problems and things like this. This is an LSC saying this is a bit of a challenge. Many of us had two jobs rather than one job for the period of time of the transition but, by and large, it has gone very well. We are also in a LSC, however, which recognises that we have absolutely massive challenges in this particular location. If you look at the way that the history of the region or our sub-region has moved, then it has moved from a largely manufacturing-type industrial-type of sub-region to one which is now virtually completely balanced amongst the various sectors that you would typify but which over the next 10 years is going to move even more rapidly away from a manufacturing base into a service sector and finance sector-type base. To give you an idea of how that reflects in skill terms, it is a shift of somewhere in the region of 20,000-odd jobs compared to the skills base, so if you take the combination of what is the shift in jobs and what is the demographic nature of our skills base, it becomes an even bigger challenge. You would really have to have something in the region of a lower 30,000-type shift in the skills structure of the sub-region. So we are happy so far that we have provided an organisation and a set of relationships and I think a pretty good partnership spirit amongst the partners and ourselves in the sub-region but very, very aware of the massive job we have got to do now and over the next few years.

220. Thank you for that. David?
(Mr Cragg) Just to put a little bit more flesh on the bones. What we have now got in a sense for the first time in a generation is a belief that we have the potential over the remainder of the decade to achieve full employment for all those who are currently registered unemployed. That is a radical shift for us and potentially the basis for motivation and aspiration in ways that we have not seen before. But we have got an enormous polarisation in that skills base. Ten years ago you would have found a very different pattern, but now if you look at the degree and professional qualification level (what we in the jargon call level four) we are above the national average in the sub-region whereas 10 years ago we would have been quite significantly below the national average. Yet at the other end of the spectrum you have 38 per cent estimated from a very reliable base of people with less than a level 2 qualification, less than five GCSEs, less than an NVQ2 or its equivalent. You will know from your wider work that the correlation between low skills, and in particular a lack of basic skills, is a very strong one. If you overlay all of that the demographics, if you put it very simply, the fastest growing groups within the working age population, in particular ethnic minorities and older workers, are the least qualified and least skilled. The group which is declining the most rapidly is the one that has been traditionally in greatest demand, 25 to 45-year-olds, in particular the white population. I was interested in the earlier debate because we have placed demographic changes as absolutely one of the central issues for this city in in particular but for this sub-region as a whole. If you want some stark figures, then we would estimate that by 2010 they will be 60,000 fewer white working age people, there will be 50,000 more people of Pakistani and Bangladeshi heritage (who are several times more likely to be unemployed and are the least skilled group in terms of formal qualifications) and, similarly, there will be another 12,000 working age people from an African Caribbean heritage. If you overlay on that age, there will be 40,000 more people over the age of 45. So you will have a demographic mix that will have to be tackled. My main conclusion around skills, for what it is worth, is that we have to get off a hook which is age related in terms of our policies and our investments. You were talking, Chairman, before the formal session about manufacturing. We desperately need, for example, mature apprenticeships in manufacturing. We will not address manufacturing skills shortages on the vain assumption that we will attract enough young people; we will not. We have to have a major up-skilling programme, both to raise the skills of people already in the workplace, but also to bring back older workers who have got manufacturing skills into manufacturing who need a mature apprenticeship. If you were looking at one individual piece of work, we were delighted that we were chosen as one of the six national pilots for the Employer Training Pilot because we think there is a crying need locally, that is the entitlement to an NVQ2 for people without a qualification in work. We have, as you will know, importantly for small employers, which is the vast proportion of employers, wage replacement cost. We are at the early stages of that. It is very interesting to observe the employer response, which is wholly enthusiastic and very, very positive. Our formal market research tells us very loudly indeed that employers, rightly or wrongly, are particularly welcoming and support the release of their staff to be formally trained to those qualifications, so a flavour perhaps.

221. I was going to open up the questioning to John and David and then I am going to ask Martin and Stephen to say a few words and then we get a little questioning of you and then we can bring you together. When we meet Bryan Sanderson, because the LSC nationally is a responsibility of my Committeeit is the largest quango, in fact it spends an enormous amount of moneywe tease Bryan and we call him the biggest quango holder, and of course our job is to ensure that any expenditure under the education and skills' budget is wisely spent because it is taxpayers' money. What surprised us when talking to the regional Government Office was that they seemed to have very little relationship. When we pushed them in terms of who they had relationships with and whether there was an active partnership, the one blank we drew was with yourselves. It seems a puzzlement to us that the Regional Government Office for the West Midlands would say they had very little contact with you.
(Mr Towers) Do they not know they have got a council member on our board?

222. I don't think they mentioned that.
(Mr Towers) He was there this morning. I observed him from 8 o'clock until ten, so this is true!

223. Why do you think they said that they did not feel they had much of a relationship?
(Mr Towers) I have not got a clue; you had better ask them.
(Mr Cragg) Chairman, that is not correct. We are co-terminous as a regional grouping with that region. I think there is a slight confusion here. If yours is a literal question about their relationship with us in terms of the accountabilities, they have no responsibility for the Learning and Skills Council. If I look at it from a purely personal perspective, I represent the Learning and Skills Council on the Regional Programming and Monitoring Committee. I have worked very closely with the Director of the Government Office on all matters to do with European strategy for the region.. I would say the interfaces on things which are pertinent to the government are very close. Day-to-day, the Government Office is not a large operation, it does not have direct

224.it has 400 staff.
(Mr Cragg)It does not have a direct responsibility for us, and I think that is probably what they are referring to.
(Mr Towers) I think that must be the case as well. Sorry to jest slightly about it. First of all, there is a formal structure anyway and, as far as I know, all local LSCs have a Local Government Office member on their board, as we have. In addition to that, I agree because of our history of being the TECs and the relationship with the Government Officeand certainly David and I have a very close relationship with them in areas such as the Accelerate Programme, in areas such as the work we are doing on the car industry front in the regionthere is a very heavy Government Office presence with us. Do they run us? No. If they interpret that question how do they manage the LSC, they do not because they are not supposed to, but they do work very closely with us.

225. We will clear that out the way.
(Mr Towers) Alright.

Chairman: Can we move on more generally. Jeff, you are bursting to ask a question.

Jeff Ennis

226. If I talk to any FE principal in my part of the world, South Yorkshire, and I guess it would be true to say if you talk to any FE college principal in the West Midlands, they would say FE for far too long has been the "Cinderella" part of the Education Service. As you know, we currently have a disparity in funding between sixth forms and LEA colleges. How do you see this developing and the gap closing in funding terms?
(Mr Cragg) First of all, of course, the overall settlement and terms of the settlement are things which are matters for national negotiation, not least which are significantly determined by the Department for Education and Skills. To take a specific example, the real terms guarantee to schools in terms of the change in the funding arrangements was something that was predetermined by Ministers. The LSC nationally sets out its stall to have a single unified post-16 funding regime from 2005. On that basis I think there is a lot of further work to be done. We have got to see how the new schools funding regime does bed down, but it is ultimately a matter for the settlement between the Government and the LSC at a national level. If you ask me to give a personal view, because I think you are asking me for a personal view, I think it would be enormously helpful to have a consistent and fair funding regime. One of my greatest fears, and I think it would be a fear that is shared by most managers in institutions, is that we have seen a very damaging casualisation of the FE workforce through excessive efficiency gains during the 1990s. We have begun to restore some of that. In this financial year and the previous year (the previous academic year) we have stabilised and given a rate of increase which was fairly close to cost of living. This year we have been able, through decisions taken by our National Council, to start to close that gap, but there is still an issue to be addressed and I do not think any of us would want to shirk that issue.
(Mr Towers) I think you would get the same sort of commentary in this sub-region in terms of comparison of those issues. I also thinkand I do not think this is rose-coloured specsthat compared to three or four years ago you now have more of a heads-up attitude among most of the FE establishment than perhaps existed then.

227. I know you will not determine the answer to this question, but do you think we will see a levelling up in terms of resource between the two or a levelling down?
(Mr Cragg) Frankly, because the Government took a very clear policy decision around the real terms guarantee, the only way it might work would be through a levelling up, if there is to be levelling. I personally would welcome that. The one thing we have got to be careful about is that funding for schools in sixth forms does not become politicised over the next 12 months. We have made it our business, apart from working very, very closely collectively with school heads and college principals in a collective process, to conduct an extremely successful 16 to 19 review and an extremely favourable area-wide inspection, which is complimentary about all the work done in that territory, but in schools on their own we have established very good liaison arrangements, working very closely working with our colleagues in the LEA. When it comes to funding, we have not taken our eye off the ball. I am literally in the process at the moment of setting up a whole series of seminars this autumn to make sure headteachers get an opportunity for feedback on what their experience is of the first phase, the real implementation phase, and we want to make sure we feed back nationally what the policy implications are of the real experience on the ground as we roll through the year.

228. How is the relationship between the 47 LSCs locally and the national LSC? How is that panning out? Is it exactly the same relationship between the former TECs and the national body of TECs or how does it differ in any way?
(Mr Cragg) You could not draw that comparison because the TEC National Council was a trade association, it was a representative body, it was the voice of the 72. This is a complex model, you understand that from the discussions you have had in your Committee before, and it was bound to take time to bed down. I think the way we are integrating our management structures and decision-making processes is now extremely encouraging and very, very positive. I, for example, sit on the National Operations Board with national colleagues where national directors are sitting with executive directors from the 47 LSCs drawn from the regions, so we have got a regional perspective which is starting to tackle decisions collectively which is really beginning to act as we wish it to actas a unitary body. We have made huge progress in that direction. We have programme boards covering all the major areas of work. You have to balance, of course, the commitment of time that means and avoid creating bureaucracy and waste in the process, but I think we are getting that about right. Certainly in terms of devolution I believe we have got significant flexibilities in the way we operate now. There was a lot of debate around that in the early stages. If we look at discretionary funding, as you might describe it from your Committee's perspective, in excess of ten per cent of my total budget (and I have well over £2.5 million) is being targeted mainly on skills and workforce issues or on issues of disadvantage or inequality, which I think is about right.
(Mr Towers) You have to think hard and long about the challenge that Brian and John have had. They have had a challenge of taking a very centralised, very monolithic organisation and turning it into an organisation that is supposed to be a supporting process for regionally-made decisions. That is very easy to explain, that is very easy to define. It is probably a little less easy when you have got 500 people who were previously part of that central, decision-making, monolithic organisation. And we have seen progress.

Jonathan Shaw

229. I want to discuss with you some issues that were raised from one of our visits this morning. As you know, we have been visiting a number of educational establishments, one of them is the Women's Academy, which you may be familiar with
(Mr Cragg) Very familiar.

230. It was very clear to us that they were in a very poor area of Birmingham and offering women the opportunity to return to education. We met a woman who left school at 13 who had now completed A-levels and was now working, and there were many other success stories throughout the Academy. Given the point that you made about the demographics, this is a type of institution that they are keen to replicate elsewhere in the city, but they didcomplain is not the right wordsay there were difficulties with the LSC and your predecessor in terms of funding capital.
(Mr Cragg) That is a very surprising remark. First of all, let's say where we started from. Slightly unusually (because we were well prepared) instead of just walking about the world in the first six months of our existence saying, "We are the LSC, we have these powers, we are very important", we had a development plan and we focused on what we thought the critical goals were for the next decade, and among those goals and key issues was improving the infrastructure of colleges and further education generally. In doing that, we set out our stall to really tackle a legacy of fairly dreadful buildings and under-investment, and in the last 12 months, I suspect of all local LSCs throughout the country, we have probably secured more capital investment than any other. We have got a commitment to approval for two completely new colleges which are much needed, one very much right at the heart of the inner city. In the case of the Women's Academy, which is part of City College, we are supporting a whole range of capital projects in terms of outreach with a different focus but similar concept to what they are doing with the Women's Academy. We have the South Birmingham College and we have assisted them with £7 million worth of investment in a £16 million project which will be right at the centre of the Eastside development of the city. I could go on.

231. That is the response I wish to hear but obviously where organisations raise these issues with us
(Mr Cragg) I am pleased to have the opportunity.

232.It is part of our job.
(Mr Cragg) Can I say another thing, if I can be a little bit bolder

233. Now you are on a roll!
(Mr Cragg) We are engaged very, very closely in the whole development of the Learning Quarter for the big East Side Regeneration Programme. I believe we will get not only significant LSC investment but focused investment by the Regional Development Agency into a whole range of further and higher education facilities which will be an integral part of this new Learning Quarter. That is a very exciting development, especially for FE colleges.

234. It is quite a unique institute. You could say it is another specialism. It is particularly for women and 83 per cent of the women are from ethnic minorities. We are seeing specialist schools grow around the city of Birmingham and the Committee has visited a number of them. When we ask the question to staff, teachers and pupils, "What does it mean for the school?" they talk about of course the additional investment, the additional money that they get from that, but also the status within the communities which provides a very positive focus for the school. I wonder how you see specialist schools fitting into your plans of providing the skills or closing that skills deficit that you have talked about. What is the relationship with specialist schools, the skills deficit, and your plans and the LEA?
(Mr Towers) I think once again David achieved a massive conjuring trick because one of the first things we set about with the colleges was to get them to actually run their own working programmes to identify where those specialist learning activities should best take place. Obviously we provided demographic data and we provided help and so on in that process, but out of that process came what is a really quite clearly defined programme in terms of how just that subject should be approached here in Birmingham and Solihull. I guess it was one of the biggest sources of tension because this has been a widely discussed topic and I guess it was a source of tension when the LSC process was first developed but, yes, it is there, and it is now moving forward.
(Mr Cragg) To be specific around that, at a very early stage, instead of looking for competitive bids for centres of vocational excellence, we put in place a planning process collectively with all the colleges. We agreed at the first stage the obvious choices for educational specialism so, for example, the College of Food, which is literally round the corner and which is a National Centre of Excellence for hotel and catering, became the lead vocational college for hotel and catering. It is was self-evident and a given. But in lots of other areas you have got a legacy of the lowest common denominator, a loss of a lot of level 3 provision, a loss of critical intermediate skills provision, no clear lead vocational institution, so we put in place collective and joint reviews with all the colleges, and for that matter other work based learning providers, to look at the balance of provision, and alongside that we did a comprehensive assets review, which has now been adopted as a national model, looking at the whole of the FE estate across the piece. Out of the very first pilot exercises, which was a construction exercise, we had unanimous agreement on some tough new recommendations about rationalisation and an agreement that four colleges would come together in a single collaborative venture. We are in the middle of a feasibility study for new investment, for a single shared site to increase both the scale, the breadth and the level, especially in terms of skills in vocational provision, for construction. That was agreed with the colleges with total support. We have similarly been through an engineering review. The one point I would make is when you talk about specialist schools, I think there is a real policy issue about how you align specialist schools with vocational centres of excellence in colleges. We are moving very productively into a very much more integrated 14-19 phase and the more you do so the more important it is that you tackle that policy issue because at the moment it looks as if the left hand is not communicating with the right hand. You have one set of arrangements for specialist schools and a completely different set of arrangements (which we would say are very well developed) for vocational specialisation in colleges. I should say that the whole approach to vocational specialisation was rooted in the principle that we wanted a federal FE system and that there should be progression from colleges which are providing entry level/first level to the centres of vocational excellence and in turn the centre of vocational excellence should have a developmental role for the whole of that.

235. Have you had discussions with the LEA about that? We do know that whilst the schools within the LEA are performing well in terms of where they have come from, they are still not seeing huge numbers of youngsters staying on post 16.
(Mr Cragg) I would not quite say that. I think we might have a debate about that.

Chairman

236. Certainly substantially below the national average.
(Mr Cragg) We are not substantially below the national average. We are at around 73 per cent compared to 75 per cent. I think we might have a statistical debate.

Jonathan Shaw

237. I do not want that.
(Mr Cragg) To answer your question, the relationship with the LEA could not be better. We have worked hand in glove to look at the whole 16 to 19 group with both LEAs across our patch. I cannot remember the two LEAs, Birmingham and Solihull, ever working so closely together. OFSTED recognised that in its area-wide review.

Chairman

238. Who should draw all this together? All of us are on "Planet Birmingham", none of us is from Birmingham, and we are trying to get under the skin of where the challenges are and what we can see to identify those challenges. Perhaps I can bring our two other witnesses for this afternoon in now. It seems there is a proliferationand you just described them, Davidof players in this. As you say, the Government Office has a hand in this, the Regional Development Agency has a hand in this, the local education authority has, you do. Looking at the local employers I wonder sometimes if they might glaze over with all the acronyms and all the players and they might say, "All we want is well qualified, skilled people that we can employ." How do you view the work of the LSCs and all these myriad group of people who are supposed to be delivering for you high quality employees?
(Mr Linton) One of the things I have noticed in this and throughout the day from the previous meeting is we talk about nurture, coaching and parental interest over the child. I was a by-product of that. I left school early, joined the Army, did not have any qualifications; now I have a degree and I work for a global communications company. One of the things that helped me whilst at university was something like the LSC, the Student Industrial Society, and getting involved and learning about skills. David talked earlier on about there being a massive skills gap, not so much in what you have got in 25-plus age but really the 40 age. That involves re-educating the parents of these children who we are trying to get up to a standard and getting modern apprenticeships where people are willing to go back to work or willing to look at skills and developing them, not so much on an academic level where you will get a certificate at the end of it but you will not really get a job at the end of it. That is what I would say an employer looks forsomebody who can really use some tangible skills, pull into the work place, and get a product and results from these individuals. One of those areas is team work, knowing how to operate with each other socially as well as working with your partners at the end of the day. If you look at certain individuals in this country and what schools are trying to do, the schools are trying to reach what the Government is putting down as a national curriculum and saying we need you to reach these standards, and really forgetting the extra curricular stuff that they should be getting involved in, like the team work and the leadership and looking at what employers are looking for. Maybe we ought to ask employers like ourselves to go into schoolsand I have done that in the pasttake a day out, very much an industry day, and say, "What do you understand as a young student looking to leave school about the employers? What are you looking for?" If we have got 16 to 19 year olds not continuing with their education like I did and going back at 24, what happens in between those years and what are they doing?

239. That is a very good point. I would like to come back to that Stephen, how do you see this?
(Mr Ellison) I have got quite a bit to say, being both on employer and involved in commercial training. I understand 99 per cent of the acronyms that have been bandied about, so it is perhaps a little easier for me. I have made several notes and agree very much with what David and John have said about the tremendous efforts that have been made in Birmingham, but probably could come up with one or two negatives from my point of view where Birmingham has gone the 90 per cent but then has failed the last ten per cent to make it work. Taking a point Mark just made, one thing we may well be in danger of is encouraging our 16 to 19-year-olds to stay on at school and do higher qualifications and then having a very similar situation they are in in France where they have nobody who wants to take up a manual job. The suicide rate amongst teenagers in France is horrendous, much, much worse than it is here. Yes, the pursuit of academia is an ideal that we should be going for but it does not necessarily suit everybody.